Global champions from emerging markets, by Jayant Sinha

Sunday, June 12, 2005

Conventional wisdom holds that companies in emerging markets face daunting obstacles when trying to expand internationally. According to this view, the same factors that make them successful at home–privileged relationships and assets, high tariff walls, and a captive market of local customers–inevitably work against them abroad. So what explains the rise of the emerging world’s true global leaders, which operate diverse businesses profitably, at scale, and in a wide range of geographies? Are HSBC, Ranbaxy Laboratories, and Samsung Electronics merely the exceptions that prove the rule?

In reality, emerging markets, far from being a handicap, actually provide an invaluable springboard. The combination of demanding yet price-sensitive customers and challenging distribution environments can help companies develop the distinctive capabilities they need to compete successfully elsewhere.

Ranbaxy, Samsung, and HSBC followed similar paths to global success. Each of them first forged distinctive capabilities in the difficult circumstances of its home market and then mastered the art of transferring its business DNA: the core skills and supporting organisational culture that help it make money, reliably, in diverse markets. To pull off this trick, a company must train–and then trust–a cadre of global managers who understand its distinctive capabilities but are also independent enough to modify them to fit local needs. They know how to preserve the essence of the company while morphing its systems to suit local conditions.
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Source: Bangkok Post